Tech.view

Of dragons and dungeons

Mobile broadband is rewriting the rules for video games

HAVING once lost badly at three-card brag—poker's brutal ancestor played in the pubs and clubs of Britain—your correspondent worked double-shifts to pay off his gambling debt, and vowed never again to play games of chance. The only exceptions he has allowed himself over the years have been the odd video game or two, where the stakes are measured more in terms of satisfaction than hard cash.

But even his early forays into the grinding world of monsters and loot favoured by “massively multiplayer online role-playing games” have dwindled since parenthood. Such virtual worlds are far too immersive and addictive—and keep getting more so with every increase in the number-crunching power and graphics of personal computers and game consoles. Better to stay clear of online communities like “EverQuest” or “World of Warcraft” if you are perpetually running out of time in the real world.

In the meantime, your correspondent has watched his 11-year-old and her pals progress from playing harmless multi-user games on their Nintendo DSs to more combative sports on the family Nintendo Wii. Now, instead of graduating to the richer experience of role-playing games on PCs or consoles such as the Xbox 360 or PlayStation 3, the platform of choice among today's tweens and teens is the mobile phone.

More specifically, it is the iPhone 3G. Full marks to Apple for creating such a clever gizmo for playing games, browsing the web, watching videos, listening to music, finding directions, taking pictures, texting messages and occasionally making phone calls. Playing games on the hand-held device has become vastly more satisfying because of its connection to much faster (third-generation) wireless networks. And the number of titles available to download or to play online has soared into the thousands.

But why only on the iPhone? Because, unlike Nokia, Samsung, Blackberry, Palm and other handset makers, Apple had a killer proposition to offer so it could call the tune. The unique set of deals Apple struck with its mobile carriers around the world when it introduced the iPhone has allowed gamemakers to bypass the troublesome phone companies altogether.

Gamemakers love that. The bureaucracy involved in dealing with the AT&Ts and Verizons of the world can double the time and cost of bringing a mobile phone game to market. By contrast, Apple markets the games it approves direct to customers through its own online store.

The flip-side is that few games designed for the iPhone make much money. Many of the games are free and most of the ones that are paid for cost between 99 cents and $5. A game thus has to be hugely successful for the designer to earn a living after Apple has taken its cut. Royalties in the video-game industry are typically 20%.

As a consequence, more and more games for phones are rewrites of versions designed originally for consoles or PCs. Unfortunately, much of the rich user experience provided by the more powerful platforms gets lost in translation.

The trouble is not just the phone's smaller screen and wimpier graphics engines. More fundamentally, the multimedia authoring programs—especially Adobe's Flash animation tools—employed for creating video games were never designed to work on mobile phones, although a plug-in has recently been developed.

Meanwhile, Apple's monopoly of the mobile game-playing business cannot last. The buzz at the Digital Hollywood meeting, held in Santa Monica from May 4th to 7th, was how much easier it is to develop games for mobile phones using the new Android operating system from Google.

Android is an open-source stack of software that has been embraced by many of the world's handset makers. As such, it is set to provide serious competition to the iPhone in the next year or so.

In the process, mobile games will almost certainly become ubiquitous and cheap. That has implications for the video-game franchises with megahits like “Final Fantasy”, “Super Mario Bros”, “Grand Theft Auto”, “World of Warcraft” and “Guitar Hero”. The sequels to such blockbusters can cost up to $100m to make—more than many a Hollywood movie.

Until now, such production costs have been covered by the subsequent sales. “Grand Theft Auto IV” had over $500m in sales during its opening week last April. “The Wrath of the Lich King”, the second in the “World of Warcraft” series, broke the record for opening-day sales last November with 2.8m copies worth $112m.

But insiders note the increasing resistance among even hard-core gamers to prices of $40 to $60 for the latest versions of popular titles. And it is not just the recession that is causing them to keep their hands in their pockets. If anything, video games—like cheap liquor—are largely recession-proof, offering a bigger bang for the buck than many other forms of entertainment.

What is killing prices is the way gaming, as people have known it on consoles and PCs, is becoming part of a grand mash-up of platforms—from Facebook and Bebo to Twitter, Wikipedia and the iPhone—allied to a location-aware “evernet” of persistent mobile connections supplied by third- and (coming soon) fourth-generation wireless networks.

Industry watchers call it Gaming 2.0. This is where players pit their wits not so much against a game's designers, but more against others in their social network. In this scheme of things, stuff is free—at least to start with.

Hence the emergence of games which, like shareware, are free to download and play, but come with an invitation to upgrade to a premium service for some micropayment or monthly subscription. Conversion rates are said to range from 2% to 13%, depending on how much “utility” is built into the game.

By “utility”, designers mean being able to acquire useful things in the game's virtual world—better weapons, more fanciful attire, superhuman strength—to enhance the player's chances of success. Insider tricks, crib-sheets and shortcuts are among the most popular utilities. The runaway success of “World of Warcraft” stems, in no short measure, from the range of virtual goods its players can buy to kit out their avatars.

The business models for Gaming 2.0 are still shaky and untested. Advertisers are not sure how they will participate. But the demographics of the new online gaming communities are too attractive to spurn. If the old rules apply, an audience of 18- to 34-year-olds should be worth at least $25 per thousand viewers.

That puts the interactive world of online gaming on the same patch of turf as the dispirited remnants of network television. To the hordes descending from the hills, that looks like easy pickings.